The
Economic Mirage
Carlos Moneta
The
current worldwide crisis -economic, political or social- and the
beginning of a new millenium cause us to reflect on the evolution
of Latin America’s and the Caribbean’s development during
recent years and on its unfolding during the next decade. This
analysis can not be made without also studying the processes that,
under globalisation, are occurring in the world economy as a
whole, nor those that are taking place at the intra-regional
level. However, as the author points out, this evaluation will be
strongly influenced by the framework of reference for
interpretation and evaluation that the latest developments in
economic sciences provide. The later imposes serious limitations,
as it means the application of one-dimensional approaches to a
multidimensional phenomenon -economic activity- that involves
cultural, sociological and political factors, among others. This
article, therefore, examines these limitations in crisis
situations and explores the conditions and actors which,
considering socio-cultural requirements, can make the economic
objectives pursued more feasible.
Latin
America in the International Financial Crisis
SELA's Permanent Secretariat
This
document, prepared by Egidio Luis Miotti, Carlos Quenan and
Nathalie Ricoeur-Nicolai, points out that the international crisis
that erupted during mid 1997 is different from previous ones in
that even though it began in developing countries it did not
originate in Latin America. During the second half of the
nineties, and in spite of the fact that their economies continued
to register some persistent weaknesses (deficits, uneven
development levels) Latin American and Caribbean countries faced a
fairly promising future due to the economic adjustments they had
undertaken following the debt crisis of the eighties and the
Mexican shock and strong international liquidity. Nevertheless,
the effects of the Asian crisis soon spread to Latin America
affecting first the financial area and later trade and casting an
uncertain shadow over the region’s future. As a result of the
Brazilian crisis, the region has entered into a recession, while
foreign financing continues to be inadequate and expensive.
Besides reaffirming the region’s external vulnerability, the
crisis has given rise to new discussions regarding which
institutional initiatives and policies are needed to face the
volatility of monetary and financial variables resulting from
globalization.
Crisis
= Opportunity
Ricardo Ffrench-Davis
During
the 1990’s Latin American countries registered an increase in
capital flows similar to that of the 1070’s. However, while in
the 1970’s capital flows were aimed mainly at medium term bank
loans, today they target stocks, bonds and deposits which are
notoriously volatile. At the beginning this new inflow of capital
created positive macroeconomic effects, allowing the region’s
GDP to grow beyond the increase in production. Later, however, it
caused pernicious effects as the region’s economy became more
vulnerable to future negative external shocks. Mexico and Chile
are two different examples of how countries in the region dealt
with the sudden flow of foreign capital during the period analyzed
in this article. According to the author, several political
lessons can be derived from the financial crisis. In his opinion,
this has opened up a new opportunity to significantly improve the
design of the international financial system and to review the
internal policies needed to achieve a sustainable macroeconomic
balance and increase growth.
Small
Countries and the New World Financial Architecture
Gerry Helleiner
This
article reviews the developments that led to the new role global
financial markets are playing today, the economic crises and their
contagious effects and analyzes some of the main issues concerning
the management of recent crises. It concludes by formulating a
number of suggestions regarding needed reforms and the role
countries of the South should play to insure their implementation.
In this regard, the article points out that the relevant financial
authorities must participate, perhaps through separate committees
or sub- committees, in all future FTAA or Post Lome IV Agreement
discussions on financial cooperation and crisis prevention and
management. Moreover, it suggests that their agendas should
include discussions on special treatment measures for smaller and
more vulnerable countries. Such negotiations could provide an
alternative forum in which to discuss the future global financial
architecture.
Vulnerability,
the Other Side of Economic Liberalization
Vivianne Ventura Dias
The
recent financial crisis has demonstrated that the economic
adjustment policies implemented by Latin American and Caribbean
countries have not succeeded in countering the devastating effects
of external shocks. As this article points out, the 1997-1998
crisis, with but a few exceptions, affected solely developing
economies and the most advanced and successful ones at that, those
that had distinguished themselves for having implemented policies
aimed at improving their insertion in the world economy. Some
countries of the region, such as Chile and Peru, suffered from the
fall in their exports to some of their more important markets,
such as the Asian countries. However, the decrease in the Asian
aggregate demand also affected other countries that did not depend
on those markets due to its repercussion on the price of primary
products.
The
"Samba" Effect in MERCOSUR
Eva Holtz
The
crisis that affected Brazil’s economy from the end of 1998 to
the beginning of 1999 placed MERCOSUR in the most difficult
situation since its creation in 1991. According to the author, the
developments that took place in the region and their aftermath
demonstrate in specific examples the prevailing theoretical wisdom
regarding the extreme importance of insuring consistent
macroeconomic policies and economic and financial stability in the
countries parties to an integration agreement. Nevertheless, we
can learn from past experience new ways to face with “greater
wisdom” the next stages of MERCOSUR.
Korea
and Latin America: End of a Honeymoon?
Won-Ho Kim
After
Japan, Korea is the East Asian country that has made the greatest
trade and investment efforts to cement its relations with Latin
America and the Caribbean during the current decade. Between 1990
and 1998, attracted by the trade liberalization and integration
policies implemented by countries of the region and spurred by its
need to expand its investments beyond its geographical area, Korea
invested more than $2,000 million in Latin America and the
Caribbean. However, the 1997 crisis, which in Asia affected Korea
the last, put an end to its plans to become a strong presence in
our region. What motivated Korea’s recent and aggressive forays
into Latin America’s economies? How does the financial crisis
affect Korea’s economic relations with Latin America? What
strategies can be adopted in the future regarding relations
between Korea and our region, given that both are being affected
by a decrease in international funds? These are the questions this
article explores.
Globalization
with Development
SELA's Permanent Secretariat
SELA’s
Permanent Secretariat prepared this document in view of the UNCTAD
X meeting to be held next year in Bangkok, Thailand. Its content
was analyzed by ministers and heads of state from SELA’s member
countries at the coordination meeting held in Santo Domingo. The
document is divided into three sections. The first section reviews
the major traits of the current international scenario which stem
from the globalization process and affect the formulation of
economic policies in countries of the region. The second section
presents some suggestions that could contribute to the formulation
of the region’s development agenda and highlights the tendencies
that appear to be developing for the future. The objective is to
discern development’s challenges, starting from the assumption
that there is room for the formulation of one’s own strategy
based on positive ways to face globalization. The document also
points to the role UNCTAD could play in these issues from a
development perspective, including specific suggestions. The third
section includes some general thoughts on the major ideas that, in
the Secretariat’s opinion, should guide Latin America’s and
the Caribbean’s development strategies and underpin UNCTAD’s
actions in the years to come.
The
Santo Domingo Declaration
This
text was adopted at the SELA convened Latin American and Caribbean
Consultation and Coordination Meeting held in Santo Domingo,
Dominican Republic, on August 5 and 6, in preparation for the X
United Nations Conference on Trade and Development.
The
Quantitative Dimension of States' Power
Guillermo A. Lemarchand and Carlos A. Mallmann
This
article suggests a possible formula to examine the dynamics of
states’ power. In it, an abridged version of this formula is
applied to the study of the evolution in time of the power index
of the major world powers between the years 1950- and 1996. It
also analyzes the distribution of power in the European Union and
NAFTA and defines ways to improve the quantification of the power
index of states. In the authors’ opinion, this type of
indicators are a useful tool for the analysis of international
relations.
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